Influences on Financial Management 2 Flashcards
Finanical Institutions
Establishment that conducts financial transactions such as investments, loans, deposits.
They also collect funds and invest them in financial assets.
Financial Institutions Examples
- Banks
- Investment Banks
- Unit Trust
- Superannuation Funds
- Finance Companies
- Life insurance companies
- Australian Security Exchange (ASX)
Bank
Offer services (Credit cards, cheques, overdrafts, lend money through loans)
Receive savings as deposit and lends that money at a higher interest rate
Influence Of Government
Australian Securities and Investments Commission (ASIC)
Company Tax
ASIC
Enforces Corporations Act, protecting consumers in investments, life, insurance from fraud and unfair practices
Ensures businesses/companies adhere to law, collects information through financial reports
Company Tax
Pay tax on profits before profits are distributed on a flat rate
Company Tax benefits for businesses
- No profits = No tax
- Can carry foward losses = spread out tax over years
- Tax deductions = E.g from investing in research & development
Global Market Influences
Economic Outlook
Avaliability of Funds
Interest Rates
Economic Outlook
Projected changes to level of economic growth worldwide
- Positive growth = Increased demand
- Negative growth = Economic stagnation or decline (due to less consumer spending or activity)
Avaliability of Funds
Ability to access funds for borrowing on international markets, affected by risk level, supply and demand, economic conditions
Interest Rates
Cost of Borrowing Money
- Higher Risk = Higher interest
Exchange rate movements make borrowed foreign finance risky = Increase/decrease in repayments affect profit
